MILAN Atlantia (ATL.MI) has agreed to buy Gemina GEMI.MI in an all-share deal to create one of the biggest European motorway and airport groups with businesses in Italy and Latin America.
The new group will have a market value of over 10 billion euros ($13 billion) and be controlled by Italy's prominent Benetton family through its infrastructure holding Sintonia.
The operation, Italy's largest M&A deal this year, entails a swap ratio of 1 newly issued Atlantia share for every 9 Gemina ordinary or savings shares, Atlantia said in a statement after the market close on Friday.
"The merger marks the completion of a broad industrial project, aimed at creating a leading international player in the motorway and airport infrastructure sector," said Atlantia, which operates Italy's largest toll-road network.
The deal, which is expected to be finalized by the end of 2013, does not include a cash component, it said.
Talks with Gemina, which owns Rome airports operator ADR, kicked off in January after the government approved a new tariff scheme for ADR, ending years of regulatory uncertainty.
The deal will allow Atlantia, which also operates about 1,800 km of motorways in Brazil and Chile, to branch out into airport concessions in Latin America. It will not, however, generate meaningful cost synergies, a Milan-based analyst said.
"The deal makes industrial sense for Atlantia, while I don't see cost synergies. It will take time, perhaps one year or something more, for Atlantia to step forward as an airport operator," he said.
The tie-up would make ADR financially stronger, helping it to roll out an ambitious plan of investments to bring its Rome Fiumicino airport, whose development has been held back for years, up to global standards.
The investment plan for Italy's largest airport hub foresees investments for 12 billion euros by 2044, of which 2.5 billion euros in the next 10 years.
Sintonia, whose other investors are Goldman Sachs (GS.N), Mediobanca (MDBI.MI) and Singapore's GIC sovereign wealth fund, will have a stake of 45.6 percent in the new group.
The merger echoes similar operations elsewhere in Europe.
In December, French construction and concession giant Vinci (SGEF.PA) bought Portuguese airports operator ANA with a hefty 3.08 billion euro bid, while Spain's Ferrovial (FER.MC) has set its sights on Chicago's Midway airport.
Shares in Atlantia and Gemina were suspended from trading on the Milan stock exchange on Friday morning ahead of the announcement. Before the halt their market prices implied a swap ratio of around 9.2 Gemina shares for one Atlantia share.
Shares in Atlantia last traded at 12.74 euros and Gemina at 1.379 euros on Friday.
A first shareholder meeting to approve the deal will be held on April 30. Holders of Gemina savings shares will meet on April 29.
Gemina was advised by UniCredit and Barclays. Atlantia was advised by Goldman Sachs, Banca IMI, Mediobanca and Royal Bank of Scotland.
(Reporting By Danilo Masoni; Editing by Helen Massy-Beresford)